I've written about Brazil pre-Lula and post-Lula and spent the last five years covering all aspects of the country for Dow Jones, Wall Street Journal and Barron's. Meanwhile, for an undetermined amount of time, and with a little help from my friends, I will be parachuting primarily into Brazil, Russia, India and China. But will also be on the look out for interesting business stories and investing ideas throughout the emerging markets.

Frenemy China Helping American Job Market

Long seen as the arch enemy to the American job market, China is now at least becoming more friend than foe.

“There is a lot of demand from China and companies in Ohio are looking at, from the small to mid-sized,” says Wes Aubihl, assistant deputy chief of export assistance at the Ohio Development Services Agency in Columbus. “We want to go after the 1.4 billion people in that market.”

They’re doing it. In 2007, Ohio exported $1.7 billion worth of goods to China. Last year: $2.8 billion according to the Ohio state government.

“China helps preserve jobs in Ohio,” Aubihl told me. For every $180,000 in export sales, Ohio gets one new job, he said.

It may not be a perfect science, but for China, it’s more “how do you like me now?” than anger over currency manipulation and cheap labor. The U.S. Treasury Department has said three times now that China is not a currency manipulator, by its definition of the word. And its definition of the word is the one that matters in Washington.

China’s currency keeps getting stronger. It’s now around 6.5 to the dollar. It strengthens around 4% to 5% each year and is becoming more of an open market currency.

The labor markets in China are getting more costly. This is no longer a Happy Meal economy. And so that means China is getting richer, and they are buying up American products and their companies are investing in U.S. companies. By default, they are investing in American jobs.

Inbound investment from emerging markets into the United States continues unabated, but the biggest investor in percentage increase terms, is China. Chinese companies concluded 8 mergers and acquisitions and nine greenfield investments in the U.S. in the first quarter of this year worth a total of $2.2 billion, according to a report released this week by the Rhodium Group, a New York firm that tracks Chinese investment.

Greenfield deals included a power-generator manufacturing factory in Virginia planned by Shenzhen Superwatt Power International Co, a joint venture involving developer China VankeChina Vanke on a San Francisco condominium project and offices in Silicon Valley for search engine giant Baidu.

For all the rhetoric against China coming out of Washington, the world’s No. 2 economy is a believer in the U.S. It’s keeping Americans employed, especially at A123, which was about to file for bankruptcy. The Chinese renamed it B456 Systems.

All told, 2012 ended up being a record year for Chinese investment into the U.S.

Chinese firms completed U.S. deals worth $6.5 billion, a 12% increase from the previous record of $5.8 billion set in 2010. This new record reflects both the growing determination of Chinese firms to expand overseas and the attractiveness of U.S. markets and assets to these investors, Rhodium Group said.

The most popular sectors in the U.S. are oil and gas extraction, advanced manufacturing operations that help Chinese firms to move up the value chain, and assets that allow investors to store value and gain stable returns such as utilities, real estate or hospitality. Deals closed in 2012 show this diverse mix of motives, with large-scale investments in natural resources like Sinopec’s $2.5 billion stake in Devon Energy and high-tech manufacturing firm Wanxiang’s $420 million stake in GreatPoint Energy.

The recent growth of Chinese investment is even more remarkable in light of an otherwise bleak FDI picture in the United States, Rhodium Group says.

Before the global financial crisis, the United States was the world’s premier destination for foreign direct investment with annual inflows of $200-300 billion. When the crisis hit in 2009 FDI dropped by more than half. In 2010 and 2011 inflows have somewhat stabilized but declined again sharply in 2012 in light of the fragile situation in Europe — the major source of FDI for the U.S — and uncertainties for the U.S. growth outlook.

China has come to the rescue. In percentage terms, China investment in the U.S. is up 321% over the last five years.

No one comes even remotely close to that figure.

On Friday, the Bureau of Labor Statistics reported that 165,000 jobs were created in April, pushing the unemployment rate down to 7.5% — the lowest in five years. February and March’s employment numbers were revised up by more than 100,000. With revisions, it now looks like more jobs were created in February than in any other month 2005.

The BLS of course does not say China is a help or a hindrance. It’s not their job to make that assessment. The trade deficit between the two countries keeps getting larger even as China imports more goods from the U.S. However, there is a shift occurring. As China gets wealthier and its companies think globally, they want to invest in the world’s biggest market. By investing in the U.S., China is no different than any other company investing here: they are investing in the future and, if not creating jobs, at least helping to keep them.

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